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Is Microsoft Corporation's Latest Lumia Phone Going to Be a Flop?

Microsoft
is in a serious time of transition. The company recently
completed its acquisition of
Nokia
devices, its new CEO, Satya Nadella just
laid off
18,000 employees, and the company is in the middle of
killing off Nokia Android phones
and feature phones so it can build its Windows Phone brand.

To further its mobile efforts, the company just announced it's
launching a new phone, or two, on Sept. 4, one day after
Samsung
's new phablet debuts and five days before
Apple
unveils new iPhones.

With the company trailing far behind in the U.S. smartphone
market, can Microsoft's new device be the smartphone success it
needs?

What's coming

Earlier this week the company sent out a cryptic invitation to
tech journalists to "Join us for more face time." And just last
week an internal memo was leaked in which Stephen Elop, the
former CEO of Nokia and current executive vice president of
devices at Microsoft, talked about two new Lumia phones.

Elop called the first device, supposedly codenamed Superman, a
"selfie phone" and sports a 5 megapixel front-facing camera with
a 4.7-inch display. That's about four more megapixels than the
Lumia 929's front camera and three more than Samsung's Galaxy S5.
The device will likely be called the Lumia 730, and
images
of it have already surfaced.

The 730 will be the next iteration of Nokia's current Lumia 720
shown here. Source: Nokia

In addition to the 730, a new higher-end device may debut as
well, possibly the Lumia 830. The device is rumored to have
20-megapixel PureView camera with optical-image stabilization and
ZEISS lens, and a 4.5-inch display.

Right now, it appears the Lumia 730 is the most likely to
launch at in a few weeks, though the other device may show up
too.

What Microsoft's up to

The upcoming phone is a big deal for the company. Microsoft is
in middle of doubling down on the Lumia brand and it needs this
device to spark a turnaround for its Windows Phone platform.

In a recent statement, Elop said, "We will be particularly
focused on making the market for Windows Phone. In the near term,
we plan to drive Windows Phone volume by targeting the more
affordable smartphone segments, which are the fastest growing
segments of the market, with Lumia."

He went on to say the company will introduce lower-cost Lumia
devices running the Windows Phone operating system, while the
company transitions away from other devices like the Nokia X,
which ran Android. The Verge recently
reported
Microsoft is also killing off the low-end Asha line, which runs
an operating system by the same name.

While lower-end Lumia devices will take on emerging markets,
the upcoming 730 will hit the U.S. and developed markets head on.
But despite its specs, the new phone is facing some big
hurdles.

The Windows Phone OS. Source: Microsoft

A perfect storm of competition

Microsoft chose to time the Lumia launch around Apple's new
iPhone and Samsung's new Galaxy Note 4 debut.

It's not an exaggeration to say Apple's rumored Sept. 9 launch
is one of the most anticipated iPhone events to date. The company
is expected to introduce completely new display sizes for its
phone -- 4.7-inches and 5.5-inches -- after years of sticking
with smaller displays. Aside from the larger sizes and
new specs
, the devices could play a big role in a new
Apple mobile payment system
.

As if that weren't enough, Samsung's new Note 4 shows up just
a day after the new Lumia phone debuts. The new Note is one of
Samsung's flagship devices, second to its Galaxy S5, and is
expected to have a 5.7-inch display,
Qualcomm
's Snapdragon 805 processor, a 16 megapixel rear camera and a 3
megapixel front-facing camera.

It's easily argued that even if Microsoft chose a different
time of the year to launch its new device, the competition would
be no less fierce. Heck, even
Amazon.com
recently threw a
high-end smartphone
into the mix.

But while all device makers face competition, Microsoft is
battling stagnant market share in the U.S. as well, one of its
key markets for midrange to high-end devices.

The latest ComScore data shows Microsoft with just 3.4% OS
market share in the country, with no change since February.

While that's bad news, I think the company still has more time
to turn its smartphone business around. Microsoft just closed the
deal to acquire Nokia's devices and services, and is now
beginning its new plan to focus on Lumia phones. That's going to
take several quarters to get right -- if it does get it right --
so we're not going to see the results until somewhere in 2015.

On top of that, back in April the company finally merged together
apps from its Windows Store and the Windows Phone Store so
applications will work across both platforms. This too will take
some time to reap the benefits.

While the Lumia 730 won't be Microsoft's flagship device, its
release is coming at a pivotal time for the company. If the new
device resonates enough with consumers, it could be the strong
foundation Microsoft needs to move its handset business forward.
But if it fails to deliver, Microsoft will continue to have the
shaky smartphone foundation it's had for several years.

Part of the Lumia's success will be in hitting the midrange
market and avoiding the high-end space occupied by Samsung and
Apple's flagship devices. The device is expected to come with a
$240 price tag and will also sport Microsoft's new smart
assistant, Cortana, which could give the Lumia an initial boost
due to sheer novelty of the new feature.

But in the end, consumers will decide whether the Lumia 730
will help turn Microsoft's mobile ambitions around. That's a lot
of pressure to put on a new phone, but at some point Microsoft is
responsible to actually get its handset business right -- and the
time is now.

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